UPL Q3 results: Company posts consolidated net loss at Rs 1,217 crore

On Feb 2, 2024, UPL Ltd. (NSE: UPL & BSE: 512070, LSE: UPLL), reported financial results for the third quarter ended FY24 (Oct-Dec 2023).

Financial Performance Update

Note: *Net Profit attributable to equity shareholders of the company

• Revenue and EBITDA for Q3 continued to be impacted by global channel destocking and ongoing pricing pressure in post patent space exacerbated by higher rebates.

• Liquidation of high-cost inventory, and higher rebates to support channel partners, impacted contribution margin.

• Adjusted for this temporary impact, Q3FY24 contribution margin would be ~300 bps lower vs. LY (instead of reported 1540 bps), and 9MFY24 contribution margin would be largely on par with LY.

• Differentiated and Sustainable portfolio continued to perform better. Share of this portfolio as % of CP revenue rose ~300 bps YoY to 32% in Q3FY24 and ~700 bps YoY to 36% in 9MFY24.

• Reduced SG&A expenses by 19% YoY to INR 2,272 crore.

Commenting on the Q3FY24 performance, Mr. Mike Frank, CEO – UPL Corporation Ltd., said ″Destocking continued to weigh down the global agrochemical market. Overall, prices remained stable QoQ in the crop protection business but came off significantly vis-à-vis the high base of previous year amid intense postpatent price competition. Given this backdrop, our Q3 performance was significantly impacted by these headwinds in line with rest of the industry, which is currently experiencing its worst downturn in decades. 

However, we did see a pick-up in volumes in Latin America, and a double-digit growth in revenue in the RoW region. Our high margin differentiated and sustainable portfolio continued to outperform as revenue share of this portfolio increased to 37% of crop protection revenue (ex-India) vs 28% last year. Contribution margins too were down only marginally versus last year adjusted for the short-term impact of high-cost inventory liquidation and higher rebates to channel partners.

We continued to implement cost optimization initiatives to align our operations with the new reality, reducing SG&A expenses by 19% YoY in Q3. We are well on track to reduce our SG&A by $100 million in FY25 (from the base of FY23). Going forward, while we are optimistic of a progressively improved performance in Q4FY24 and Q1FY25, we expect normalized business performance from Q2FY25. Our foremost priority is reducing debt. In-line with this, we have also recently announced a rights issue of upto $500 million and are exploring capital raise opportunities at platforms in addition to operational cash flows.″

Regional Performance Update